As predicted, Ireland has followed Greece in needing and accepting outside funds from the European Union. But the questions are still playing out: what's the upshot of the Irish bailout? Did the euro sink Ireland and Greece? Is the European Union helping or hindering recovery? Who will be affected next? People are writing about this from nearly every angle. Here's a sample of some of the things they're concerned about.
- What Does This Say About Europe and the Euro? That's the big question, and there's a lot of disagreement. "Ireland's property-boom-turned-banking-bust had little to do with its membership of the single currency," argues Philip Stephens at the Financial Times. The editorial board of British publication The Independent agrees: "In the volumes of analysis ... that ... Ireland's economic crisis has called forth, one supposed culprit has featured more than any other: the euro." Yet "now, though, as with Greece, the euro is proving less a part of the problem than a part of the solution." They think the remedy will prove to be not a "looser eurozone," as some have suggested, but "one that is closer and more rigorously supervised"--though they admit the political fallout from bailouts could well threaten the currency. Meanwhile, Stefan Auer at The Australian takes a dimmer view of Ireland's E.U. membership, and suggests that the eurozone has been a bit of a bust, "meant to embed Germany even more deeply in Europe" but instead leading to resentment, as Irish citizens object to Germany's conditions for bailing out other governments. Another group seeing reason for skepticism on E.U. policy: The Wall Street Journal editorial board.
- The State of Ireland "A bailout will do more harm than good if Dublin has to blow up its economy as the price of accepting the rescue," judges The Wall Street Journal. The board is concerned about E.U. and German pressure on Ireland to raise its corporate tax rate--The Boston Globe's editorial board is, too. But The Atlantic's Megan McArdle, generally not one to push tax hikes, observes that though "the corporate tax rate played a huge role in Ireland's growth ... it also produced some massive capital flows that in retrospect look unhealthy"--in other words, it might be time for reform. McArdle also adds an interesting bit of perspective:
Ireland remains better off than it was twenty years ago. The current pain is real, and perhaps unnecessary. But it is no small thing that a generation of Irish workers didn't have to migrate abroad.
- Who's Next? "An excellent European source told me today that his attention is now on Spain," writes finance authority Bill McBride at Calculated Risk, "and that there are some early troubling signs of rising credit costs (not just the ten year yield). Something to keep an eye on ..."
- Pick Your Parallel Vishesh Kumar at Daily Finance makes the case that Ireland's crisis is actually bigger than Greece's--more analogous to that of Iceland. The only saving grace is euro participation: "at least Ireland like Greece will be spared a devastating currency run like the Icelandic krona saw."
- Future of Bailouts Business Insider, summarizing and interpreting an offering from The Economist, explains why this bailout is not a sign of bailouts going mainstream: "Rather, [the crisis] was sparked by Europe beginning to create a system to hold private investors liable for sovereign bond losses"--i.e. Europe is beginning to clean things up.
- How This Is Affecting American Markets The Boston Globe runs a fascinating editorial on how the Irish crisis is leading Irish banks to consider pulling out on otherwise sound loans in the Boston area. That's not good, and the editorial board is hoping it won't prove to be a trend. Meanwhile, Business Insider's Joe Weisenthal marvels at the strength of the U.S. equities market:
So much is being thrown at it right now: The Ireland crisis, the China crash, and now the potential for a new war on the Korean Peninsula and... US futures are down about 0.5%. Not bad at all, really.